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Stay Calm and Invest On: Why Holding Stocks Still Makes Sense During Market Turmoil
Market Volatility Is Back — But Don’t Panic
The S&P 500 has slid more than 14% from its February highs, slipping into correction territory. Meanwhile, the Nasdaq has dropped nearly 19.3%, brushing dangerously close to a bear market, and the Russell 2000 has officially plunged into bear territory with a 23.8% decline.
Unsurprisingly, many investors are scrambling to sell — a mistake that’s all too common. Even the more seasoned among us are wondering: Is it smart to keep investing with so much economic uncertainty looming?
Ultimately, your investment strategy should let you sleep at night. Personally, I continue buying stocks weekly and investing in real estate monthly. Here’s why that approach works for me.
Long-Term Stock Performance: A Reality Check
Newsflash: markets dip from time to time.
But investors who stay rational — and not ruled by fear — consistently earn strong returns over the long haul. A comprehensive review of 16 major economies over 145 years showed stocks delivering about 7% average annual returns. In the U.S., the S&P 500 has done even better, with a historical average return of 10.49% annually (dividends included). Over the past decade, that number rose to 12.99%.
This isn’t an argument for choosing stocks over real estate — it’s an argument for a balanced portfolio.
I personally aim for 10% returns on stocks and seek 15%+ returns from my monthly real estate investments, each playing a unique role in my overall financial plan.
Why Stocks Deserve a Place in Your Portfolio
First, stocks offer unmatched liquidity. You can buy or sell with the click of a button — something real estate can’t easily match (except for publicly traded REITs, which often behave similarly to stocks).
Diversification is also simpler with stocks. With just one ETF like VTI, you can gain exposure to the entire U.S. market, or add VEU to include international stocks.
Stocks are also the definition of passive investing. Plus, using tax-advantaged accounts like IRAs, 401(k)s, or HSAs makes stock investing even more accessible — and often, free of custodial headaches or high fees associated with real estate IRAs.
The Best Buying Opportunities Feel the Worst
It’s easy to look back and say, “Buying at the bottom was obvious!” But in real-time, market bottoms are terrifying.
When everything feels bleak — recessions, geopolitical tensions, public health crises — that’s precisely when bargains are born.
And if professional analysts and economists can’t consistently predict the bottom (spoiler: they can’t), neither can we as retail investors.
Instead of trying to outsmart the market, the real strategy is consistency. As Noah Barger from NobleHouseBuyers.com put it, managing emotions is critical: “In real estate, you can touch your investment. In stocks, it’s all about managing your mindset through the chaos.”
The statistics back him up: retail investors consistently underperform because they let emotions dictate their moves.
Yes, There Are Real Risks Right Now
“But this time it’s different!” you might think.
Tariffs, inflation threats, political instability — it feels scarier than ever. But that’s always the narrative during every market downturn. In 2020, it was an unknown virus. In 2008, it was a full-blown financial meltdown.
The truth is: volatility is part of the deal when you invest in stocks. And because of that volatility, those who stay invested are rewarded over time.
Why Stocks Still Look Pricey
Even after the recent correction, valuations remain high compared to historical norms.
The S&P 500’s price-to-earnings (P/E) ratio has dropped to 25.14 — still elevated compared to the long-term average of 15–20.
The Buffett Indicator, which compares stock market value to GDP, sits at around 177%, well above the “fair value” benchmark of 100%.
Translation: stocks aren’t exactly cheap yet, even after the pullback.
Recession Worries and Tariff Fears Are Real
Concerns about a global slowdown due to tariffs and political conflicts are justified.
And yes, recessions tend to hurt stock prices.
However, no asset class is fully recession-proof — not even real estate. Some sectors perform better than others during downturns, but diversification and strategic selection remain key.
Inflation: Stocks vs. Real Estate
In an inflationary environment, real estate generally outperforms.
But stocks also hold up better than bonds when inflation spikes. Historically, equities have delivered positive returns even during periods of rising prices — another reason to maintain exposure to both asset classes.
My Strategy: Invest Steadily Through the Noise
Rather than trying to pick perfect entry points, I stick with dollar-cost averaging.
Each week, my robo-advisor invests in a diversified mix of ETFs, and every month, I invest $5,000 into passive real estate deals through SparkRental’s co-investing club.
I continued investing through the real estate market slump over the past three years and snagged some incredible bargains. I’m doing the same now with stocks.
I don’t claim to predict the future — but I do know that staying disciplined beats panicking.
As Austin Glanzer of 717HomeBuyers.com wisely said: “Passive investing works, but passive learning doesn’t. Whether it’s real estate or stocks, you need a plan, an understanding of the risks, and the discipline to hold through downturns.”
If you can keep calm while others are losing their heads, you’ll likely outperform them over the long run.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“
Stay Calm and Invest On: Why Holding Stocks Still Makes Sense During Market Turmoil
Has the U.S. Housing Market Finally Begun to Thaw After the Pandemic?
It seems like the housing market might be showing signs of life. According to a recent report from Redfin, pending home sales in early October have seen their largest year-over-year rise since 2021, with a 2% increase in the four weeks ending October 6.
This news is likely to be welcomed by real estate investors who have felt the market has offered limited opportunities over the past few years. However, it’s important to take a cautious approach—one promising statistic doesn’t necessarily indicate a broader trend.
Is the Housing Market Truly Recovering?
Let’s explore the different factors at play.
Interest Rate Reductions: A Critical Factor or a Red Herring?
The Redfin report links the surge in pending sales to the Federal Reserve’s much-anticipated rate cut announcement in mid-September. According to Redfin, this announcement prompted buyers to re-enter the market in late September, despite mortgage rates having already been falling for weeks before the cut.
This psychological boost is crucial. Although buyers were aware of the falling rates beforehand, many seemed to be waiting for a formal signal to act. This could be attributed to a lingering fixation on the ultra-low rates of 3% to 4% that buyers enjoyed before 2022.
Any rate cut announcement serves as a nudge for prospective buyers, making them feel that now might be the right time to purchase, even if mortgage rates had been decreasing already. In an unstable mortgage market, such announcements hold significant influence.
However, mortgage rates are just one piece of the puzzle when analyzing housing market performance. As noted by Investopedia, the real estate market is driven by four primary factors: interest rates, demographics, economic conditions, and government policies.
Demographics: Shaping the Market
During the pandemic, demographic shifts had a profound effect on U.S. real estate, with major population movements like the Sunbelt migration fueling booms in cities such as Phoenix and Austin, which later became unaffordable for many.
Age is another key demographic factor, and the millennial generation’s pent-up demand continues to be a driving force behind the rise in home purchases. Despite the challenges of the past few years, millennials who have longed to become homeowners are now entering the market in greater numbers, as more properties become available.
Rising Inventory: A Sign of Stabilization
A key factor contributing to the market’s stabilization is the growth of housing inventory over the last year. The pandemic had a significant impact on the availability of homes, with sellers hesitant to list properties due to COVID-19 restrictions and, later, higher mortgage rates.
Some homeowners, particularly those upgrading to larger homes, found it financially challenging to sell and take on higher mortgages. Others, however, simply chose to wait for a more favorable market.
Although the latest Realtor.com report shows that inventory remains down by 23.2% compared to pre-pandemic levels, we are seeing an upward trend. For instance, new listings have been rising since last year, with a 5.7% year-over-year increase for the four weeks ending October 6.
As of September 2024, some states have even surpassed their pre-pandemic inventory levels, including Tennessee, Texas, and Idaho, with others, like Washington, close behind.
Vulnerabilities in Certain Regions
However, not all regions are showing positive signs. For example, some areas, particularly those affected by extreme weather, have seen inventory spikes not because of market recovery, but due to homeowners trying to offload damaged properties they can’t afford to repair.
For instance, regions like Florida and North Carolina, hit by hurricanes, have experienced increases in home listings, but these may reflect a response to climate-related challenges rather than market health.
Opportunities for Investors
Investors should be discerning when choosing markets, focusing on regions where inventory is growing due to increased home construction rather than climate-related distress. States like Idaho, Utah, North Carolina, and Texas, which are building new homes, offer potential, though caution is needed in areas prone to natural disasters.
The Midwest and Northeast, meanwhile, still face significant challenges in recovering to normal market conditions. These regions have lower rates of new construction, meaning inventory remains scarce, which could present both opportunities and difficulties for investors.
The Bottom Line
The U.S. housing market is showing signs of recovery, but the situation remains complex and varies by region. Interest rates play an essential role in unlocking the market, but investors should also consider other critical factors, such as homebuilding trends, climate risks, and government policies. While the market is heading in the right direction, it’s crucial to examine regional differences carefully before making investment decisions.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“